Savers will be given greater protection if a bank fails, under government proposals due to be announced later.

Chancellor George Osborne will unveil a White Paper on banking reform, which follows the recommendations made by the Independent Commission on Banking.

Business editor Robert Peston says the chancellor is expected to announce that banks will now be forced to hold capital equivalent to 3% of their loans and investments, although the commission recommended a 4% capital level.

Angela Knight, former head of the British Banker's Association, welcomed the 3% limit, which matches an international cap.

"Banking is international, we need to match up what happens in the UK to what happens elsewhere," she said.

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